South Korean Authorities Target Crypto Leverage Regulations

South Korean financial authorities have expressed concerns over leveraged lending and margin trading services on major crypto exchanges like Upbit and Bithumb. Officials held meetings on July 30, 2025, emphasizing potential risks and investor protection.

Regulatory scrutiny over leveraged crypto products impacts South Korean trading volumes, increasing oversight in a climate responding to global regulation trends.

South Korean financial authorities have taken decisive steps to address concerns over high-leverage crypto products offered by major exchanges. Upbit and Bithumb have launched services that allow users to engage in margin trading, prompting regulatory attention due to potential investor risks.

Increased Regulatory Oversight

Key entities, the Financial Services Commission (FSC) and Financial Supervisory Service (FSS), summoned executives from principal exchanges to navigate leverage-related concerns. In the words of the Financial Services Commission:

Officials summoned executives… to discuss the new offerings and express concerns over leverage-related risks and potential gaps in investor protections.” Korea JoongAng Daily

Interim guidelines are planned, focusing on filling gaps in current investor protections while full legislation is developed.

Market Volatility Concerns

The market’s volatility might increase as leverage and short-selling mechanisms are examined. There is potential uncertainty for future capital inflows as regulators push for transparency and tighter regulations, impacting the broader crypto market.

Historical Context and Future Trends

Historically, South Korea has maintained a proactive stance on crypto regulation, issuing bans and reducing exposure risks. Any changes now could lead to reduced speculative activity and lower trading volumes, similar to past clampdowns.

Analysts suggest that ongoing regulatory adjustments might influence other markets and exchanges globally. Historical precedents indicate that South Korea’s stringent measures could set trends worth monitoring, especially given the country’s strong retail trading presence.